During 2020, Seth Britain Lab Supplied Hospitals with a Comprehensive

question 12

Multiple Choice

During 2020, Seth Britain Lab supplied hospitals with a comprehensive diagnostic kit for $120. At a volume of 80,000 kits, Seth had fixed costs of $1,000,000 and a profit before income taxes of $200,000. Due to an adverse legal decision, Seth's 2021 liability insurance increased by $1,200,000 over 2020. Assuming the volume and other costs are unchanged, what should the 2021 price be if Seth is to make the same $200,000 profit before income taxes? (CPA adapted)

• A) $122.50.
• B) $135.00.
• C) $152.50.
• D) $240.00.